Peter Costello warns ‘Australia’s luck is beginning to run out’
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Version 0 of 1. Australia’s longest-serving treasurer has warned that the country’s luck is beginning to run out as wages fall and consumer pessimism grows. Peter Costello says while Australia is “far” from recession, the economy is undergoing big changes, leaving people with a sense of uncertainty about the future. “(Australia’s) luck’s beginning to run out,” he told a property forum in Sydney on Wednesday. “For the first time since the 1990s, per capita incomes have stabilised in Australia – they are no longer growing. “Young people under 50 who have lived through a period of uninterrupted rising incomes are beginning to experience something that’s different.” Consumers were “anxious” and had “stopped spending”, he said. Real wages were falling and disposable incomes had “peaked”, Costello said. The former Liberal treasurer pointed out that the household savings ratio was now at 10%, compared with in the booming 1990s when people were spending all of their wealth. “People have closed the credit card and opened a bank account,” he said. He said while there would be a future for manufacturing in Australia, the industry would no longer be a “mass employer” of local workers. In more upbeat comments, Costello appeared to back Joe Hockey’s optimism for the future of the property market, after the treasurer on Tuesday rejected as “lazy analysis” claims it was in a bubble and risked crashing. Costello suggested Australia’s strong population growth would continue to support the property market and he also insisted that housing was “not expensive” in Australia, compared with overseas markets. “Building a house is comparatively cheap,” he said. “What is expensive in Australia is land. “So we have an increasing demand but we have quite a restrictive supply of land. “As a result, prices are high.” He blamed that on state taxes imposed on the release and transfer of land. |